Find the maximum car price you can actually afford on your income using the proven 20/4/10 rule — plus your real monthly payment and an instant verdict, not just a number.
Buying more car than you can afford is one of the most common money mistakes, and it is easy to make because dealers and lenders quote you a monthly payment, never the full cost of ownership. A low payment achieved by stretching a loan to 72 or 84 months feels affordable until you add insurance, fuel, maintenance, and the fact that the car is depreciating faster than you are paying it off. This calculator flips the question around. Instead of just telling you a payment, it tells you the maximum car price you can truly afford on your income, shows your all-in monthly cost as a percentage of gross income, and gives a plain-English verdict so you know instantly whether the car you are eyeing is affordable, a stretch, or a budget-buster. The result updates as you type.
Financial planners use a simple, battle-tested guideline for car buying called the 20/4/10 rule:
This calculator works the rule backwards: it takes 10% of your gross income, subtracts your running costs, and figures out the largest loan — and therefore the largest car price with 20% down — that still fits. That is the number competitors rarely give you.
The table below applies the 20/4/10 rule (4-year loan at 7% APR, ~$150/month running costs) to show the rough maximum car price for different incomes. Your own number will shift with your rate and running costs — use the calculator for an exact figure.
| Gross income | 10% monthly budget | Max payment after running costs | Max car price |
|---|---|---|---|
| $40,000 | $333 | $183 | ~$9,500 |
| $60,000 | $500 | $350 | ~$18,300 |
| $80,000 | $667 | $517 | ~$27,000 |
| $100,000 | $833 | $683 | ~$35,700 |
| $150,000 | $1,250 | $1,100 | ~$57,500 |
The sticker price and the loan payment are only part of what a car costs. Over a year you also pay for insurance (often $1,200–$2,500), fuel, registration, tyres, and routine maintenance, plus depreciation — the silent expense that can be the largest of all in the first few years. Stretching to an 84-month loan to "afford" a pricier car means you keep paying interest long after the car has lost much of its value, and you are more likely to owe more than it is worth if you need to sell. Keeping total monthly costs under 10% of gross income protects you from that trap and leaves room for the rest of your budget.
Using the 20/4/10 rule, about $18,000–$20,000. Ten percent of $60,000 gross is $500/month; after roughly $150 in running costs you have around $350 for a payment, which finances about $14,600 over four years at 7%. With 20% down that supports a car price near $18,300. A bigger down payment lifts that figure.
It is a car-buying guideline: put at least 20% down, finance for no more than 4 years, and keep total monthly car costs (loan, insurance, fuel, upkeep) under 10% of your gross monthly income. It keeps you from going underwater on the loan and overstretching your budget.
The 10% guideline is based on gross (pre-tax) income because that is the standard rule of thumb. If you prefer a stricter, more conservative budget, apply 10% to your take-home pay instead — you can model that by entering your net annual pay in the income field.
Usually, yes. Longer terms lower the monthly payment but pile on interest and keep you owing more than the car is worth for years. If you can only afford a car by stretching to 72 or 84 months, the 20/4/10 rule says it is too expensive for your budget.
Aim for at least 20% of the price. A larger down payment reduces the loan, lowers your payment and interest, and helps you avoid being underwater — owing more than the car is worth — in the first couple of years when depreciation is steepest.
Yes. The running-costs field lets you add monthly insurance, fuel, and a maintenance allowance, and the verdict measures your all-in cost against the 10% guideline — not just the loan payment, which is what makes the result realistic.